A centrist globalist and a populist isolationist. The centrist leading the populist by what appears to be an insurmountable margin. History does not repeat itself but it does rhyme. Clinton v. Trump. Macron v. Le Pen. Macron represents the majority and mainstream views of much of France, but fails to ignite any real passion. A certain percentage of his constituency has been described as ambivalent or holding their noses to cast a vote. There are mounting concerns that voters who feel sufficiently uninspired or disenfranchised by the technocratic former investment banker may simply stay home, which is not typical for a major French election.
On the other hand, we have Le Pen, who appears to have a smaller constituency, but it is fierce and it is loyal. Her rhetoric is inflammatory and gives voice to the concerns of the French commons, turning words like globalism, partnership, integration and immigration into damning words. Macron’s margin is hovering around 20 percentage points, but there is a great deal that is still unknown, and a strong showing for Le Pen, even if it does not result in a victory, signals a major change in sentiment in the land of liberté, egalité, fraternité.
Last week, based on strengthening fundamentals and an (partially) encouraging outcome of the French elections, we re-established a beachhead position in European equities. In the jargon of our business, signs are directionally positive. Macron’s immediate strength in the polls after the first round of the French election was encouraging, pointing toward an inclination for France to remain a part of and constructively engaged in greater Europe. However, a Le Pen surprise could upset the cheese wagon, and for this reason we stopped short of building a full conviction weight.
Back to the café, perhaps for un petit verre de vin, while we wait for Sunday, May 7th.